And as unfair as that is, things get even less fair, because your credit won’t just affect you. It can also affect your kids. But instead of taking this as a negative, try and take this expert advice as a warning and a motivation to rise to the challenge of improving your credit and building a better future for you and your children.

In your best interest

You probably know that a lower credit score means higher interest rates. And that can affect your children.

“Sadly, your credit doesn’t just affect you, it also affects your kids,” Michael Banks, founder of FortunateInvestor.com(@FortunateInvest), warned us. “One of the biggest ways it can affect your kids is via interest rates. With a lower credit score, every loan you take out ends up having a higher interest rate. It may not seem like a 4.65% interest rate on your mortgage is that much worse than a 4% one, but over the life of your children, that can add up to thousands of dollars- dollars that could be used to pay for college, cars, and other expenses you may encounter as your children grow up.”

Schoooool’s out for credit

You’ll notice one of the concerns Banks mentioned was college costs. Education was a recurring concern among the experts we talked to. And it makes sense: your kids’ education can have a big impact on the rest of their life. And sadly, if bad credit is going to influence it, it’s not going to influence it in a positive direction.

Accredited financial counselor and founder of Youth Smart Financial Education ServicesRoslyn Lash (@RosLash), painted us a picture of how things can go wrong: “If the child needs an expensive graphing calculator and you don’t have the cash, your bad credit could prevent you from buying it, contributing to your child’s classroom struggles. In addition, higher grade classes offer expensive field trips, often out of the country. Without good credit, your child may not be able to attend. If s/he does attend, it will be at a higher cost due to the higher interest rate. And lastly, when it’s time for college, your teen may need a co-signer (with good credit) for a student loan. Again, you won’t be able to help them. Bad credit hinders you from helping them get a better grip on life.”

Generalized credit anxieties

If you have bad credit, you probably find yourself worrying about it somewhat frequently. Sadly, children can catch some of that worry.

Marc Johnston-Roche, cofounder of Annuities HQ(@AnnuitiesHQ), echoed the concerns about education, in addition to bringing up financial anxiety: “Growing up in an environment of constant financial worry can cause your children to ‘inherit’ those same concerns and carry them into their adulthood.

“Bad credit could also impact their ability to receive student loans for college, and limit your ability to help them as a co-signer for their first car or home.”

“Bad credit will limit options that you have to provide your kids opportunities. A lot of things your kids want and need cost money and unless you are flush with cash you may from time to time require credit to get through the lean times. Back to school shopping, camps, and extracurricular activities all cost money and good financial management and the availability of credit can help you provide these things for your children.

“Kids learn a lot from their parents and financial management is one of them. If you are constantly struggling with your finances or are denied credit for large purchases these events can rub off on your kids and they may be less likely to handle money of finances when they are of age to need to. Set a good example and mind your finances if for no other reason than to set a good example for your kids.

“Your children will need you at some point for financial help. They may need student loans or need you to co-sign a loan for their first car. These things are going to be dependent on your ability to obtain credit and this requires a strong credit history. Don’t waste away your financial future and your child’s hopes and dreams because you have sloppy money habits. Make sure that you don’t have more credit than you can handle. Pay your bills on time and act responsibly with money.”

Are you (in)sure?

Bad credit can even affect you and your kids in ways you might not have realized. Like your insurance coverage!

“In some states, your credit based insurance score can be used to rate your insurance,” Scott W. Johnson, manager and founder of Marindependent Insurance Services LLC (@marindependent1), told us. “If your parents have a bad score and end up having to pay more for auto or home insurance, it could result in the parents opting for less insurance. This could obviously wreak havoc on a young adult that is still getting their auto insurance from their parents. Lucky for me, my home and auto clients are based in California where this practice is not allowed. There are a few more states where this practice is illegal.”

But don’t give up hope!

We know this can all sound like a huge bummer and you might think a bad credit loan is your only option when you need money. But as we said earlier, take it as an incentive to grow your credit. Get a secured credit card and pay it off in full every month. Catch up on all of your bills, asking friends or family if you need help. Before you know it, you’ll have a shiny new credit score and your children will have a shiny new future!

Have you talked to your kids about the effect that bad credit can have on their futures? We’d love to hear about it! You can shoot us an email by clicking here or you can find us on Twitter at @OppLoans.

Contributors

Michael Banksis a seasoned finance professional and founder of FortunateInvestor.com(@FortunateInvest). With 20 years of professional experience in the financial services industry, he uses his expertise to turn simple lessons on money into lifelong habits that form the basis for a successful financial future.

Marc Johnston-Roche, working steadily in the financial services, online marketing and lead generation industry for over eight years, Marc has had literally thousands of conversations concerning annuities with prospective buyers and advisors. Always looking forward to the time when he could develop a company network of retirement professionals based on three equally important but simple principles: respect, integrity, and professionalism. With his understanding of online marketing operations – he branched out with his partner and formed Annuities HQ(@AnnuitiesHQ).

Roslyn Lash (@RosLash) is an Accredited Financial Counselor. She specializes in financial education, adult coaching, and works virtually with adults helping them to navigate through their personal finances i.e. budgeting, debt, and credit repair. She is also the founder of Youth Smart Financial Education Services. Her advice has been featured in national publications such as USA Today, TIME, Huffington Post, NASDAQ, Los Angeles Times, and a host of other media outlets.

Justin Lavelle (@Justin_Lavelle_) is a Scams Prevention Expert and the Chief Communications Officer of BeenVerified.com (@BeenVerified). BeenVerified is a leading source of online background checks and contact information. It helps people discover, understand and use public data in their everyday lives and can provide peace of mind by offering a fast, easy and affordable way to do background checks on potential dates. BeenVerified allows individuals to find more information about people, phone numbers, email addresses and property records.

Scott W. Johnson is the owner of Marindependent Insurance Services LLC(@marindependent1), a hard to place and affluent home Insurance Agency based in Marin County California. Scott enjoys reading, investing, and the outdoors. He can often be seen on the trails in Northern California on his mountain bike or skis.

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